Oregon State Schools Superintendent Susan Castillo made her first State of Education speech Thursday, highlighting moderate progress by students in reading but calling on school districts to make a renewed commitment to high standards despite the state's financial woes.

The event, held at Intel Corp. in Hillsboro, was the first public address by the state superintendent since narrowly winning a third term in the May primary.

"I felt it was important to do this because we have successes to talk about," Castillo said. "Also, this is the time we need to continue to push forward. Our financial resources cannot be an excuse."

Castillo's call for improved graduation rates, higher standards and achievement comes at a difficult time: National reports put Oregon's reading and math standards among the bottom half of states. Both major candidates for Oregon governor tout plans for education reform, supporting the elimination of Castillo's office as an elected position. And as the state is poised to adopt national standards and bump up math achievement targets, school district officials fear that shrinking budgets are setting them up for failure.

Castillo says she's not concerned with the political talk surrounding the future of her office or the Education Department.

"They can talk about rearranging the deck chairs and rearranging our government," Castillo said. "The pressure I'm feeling is from school districts about whether we should keep going in this direction. I'm saying we cannot retreat from what we're doing here."

Before more than one hundred Intel employees, Castillo highlighted some of the initiatives she says are successful -- increasing access to advanced coursework, using data to drive instruction and setting higher Oregon diploma requirements.

Thirty-one percent of Oregon high schools were rated "outstanding" in district report cards released Thursday, an increase of about 11 percentage points, mostly driven by reading gains. Students who took the reading test last school year are the first who must pass the state reading test or its equivalent by senior year to get a diploma.

Castillo told employees that education is the key to lifting the state out of its recession. She also applauded Intel for its support of Oregon public schools. But during the question and answer period, Intel employees didn't go easy on Castillo.

They asked if she would support spending less money on prisons and diverting that money to education even if it means releasing some prisoners early.They wanted to know if the state teachers union is an impediment to success in schools and what Castillo plans to do to prevent Oregon's top students from leaving the state for college and careers.

She answered some questions directly but sidestepped a few of the more controversial issues. Castillo said she supports increased spending on schools and believes it should be the top priority for legislators, but didn't address prisons. She said the state's teachers union is frequently at the table during discussion of tough issues and that teachers are often made scapegoats for Oregon's problems.

Castillo was criticized during her campaign for the multi-year phase-in of the new Oregon diploma requirements. On Thursday, she talked about more aggressive reform.

Later this month, the state Board of Education is likely to approve new math achievement standards that would go into effect immediately. Some have said districts need more time to prepare students, but Castillo says Oregon cannot afford to delay any longer.

If the board approves new math targets, students would have to score between one and seven points higher on state tests in order to meet benchmarks.

Kent Hunsaker, executive director of the Confederation of School Administrators, said implementing the change immediately would be difficult without resources to train teachers and would inevitably lead to lower scores.

"If you're going to have new standards, that's not enough," Hunsaker said. "You need a plan to implement. We support the standards, but let's do something ... that gives us a chance of success."

Castillo spoke directly to those concerns Thursday.

"People tell me we can't expect more of our kids right now because resources are limited," Castillo said. "But I refuse to believe we should accept the status quo for our kids because times are tight...People are concerned about how it will look. People may see performance go down. But the kids are not worse. We've set the target higher because we believe they can achieve more."